Beginner in selling Bull Put Spread

[ironchef]

90% or more is the number I get in ThinkorSwim, I like to stay on the safe side for now and this is what I consider relatively safe for me. It might change in the futur, will see.

What about you, would you do those ones without spreading it ?

Trading is my only job for a long time but I exclusively trade options only since 2013, so I am relatively new to this game. I do simple directional bets, long or short. Spread only if I leg into them while managing the trade.

If you can get 90% directional correct (including timing) you are much much better than I.

By the way I am just a small mom and pop retail options trader.

Good luck.

 

[Megane]

Trading is my only job for a long time but I exclusively trade options only since 2013, so I am relatively new to this game. I do simple directional bets, long or short. Spread only if I leg into them while managing the trade.

If you can get 90% directional correct (including timing) you are much much better than I.

By the way I am just a small mom and pop retail options trader.

Good luck.

When I say I have 90%+ chance, I use the %OTM in ThinkorSwim, is this reliable ?

In my 3 years of backtesting, I was wrong twice on the RUT with that strategy so I thought it was accurate. Please correct me if I am wrong.

 

[ironchef]

When I say I have 90%+ chance, I use the %OTM in ThinkorSwim, is this reliable ?

In my 3 years of backtesting, I was wrong twice on the RUT with that strategy so I thought it was accurate. Please correct me if I am wrong.

It is most likely accurate but that does not mean you will be profitable in the long run.

When you do a trade always ask yourself: Why would your counter party make this trade? Why would they hand you free money? What do you know that they don't, after all they do this for a living? Option is not an easy game. Some of the brightest minds in finance are your counter parties.

I am not the one you should ask for opinions, seek out the ET pros, read up on their posts and ask their advice.

Regards,

 

[Kim Klaiman]

If you are so sure, why don't you just go long or short instead of doing a spread?

Doing OTM spread allows you to be slightly wrong and still make money. Doing long calls (if you are bullish) requires you to be really right (on direction, size of the move and timing). With spreads, time is on your side (at least if you OTM put spreads). With straight calls, time is against you.

 

[ironchef]

Doing OTM spread allows you to be slightly wrong and still make money. Doing long calls (if you are bullish) requires you to be really right (on direction, size of the move and timing). With spreads, time is on your side (at least if you OTM put spreads). With straight calls, time is against you.

Thank you for your coaching.

No disagreement there. I was just wondering, if she was so sure of the directional, why not a straight directional bet? With spread, you limited both your gain and loss whereas a straight long bet, limited loss but unlimited gain, especially if she could predict the directional with a 90% accuracy!

 

[Megane]

Here is an update for the Sept option coming to an end very soon.

So far, things looks real good !

AMZN Sept 17 880/875 for .28 X 40 contracts for a possible profit of 1120$

RUT Sept 17 1230/1225 for 0.22 X 35 contracts for a possible profit of $770

SPX Sept 17 2260/2255 for 0.20 X 35 contracts for a possible profit of $700

Total profit for Sept options: $1582.00 Now let see if it goes as plan in several days

 

[vegamedic]

Just to be clear, you started trading options 2 weeks ago and you're turning 35 spooz lots at a time? don't you think maybe you might want to start w/ 1-2 lots?

 

[Megane]

Just to be clear, you started trading options 2 weeks ago and you're turning 35 spooz lots at a time? don't you think maybe you might want to start w/ 1-2 lots?

After backtesting of 3 years, I felt confortable enough to do it this way.....

 

[TradingDemystified]

After backtesting of 3 years, I felt confortable enough to do it this way.....

Megane I know you feel confident because of your backtesting and maybe even paper trading, etc. but believe me, when push comes to shove and your positions are tested (and they will be, just probabilities playing out) it is much easier to manage a 1-2 contract position like Vegamedic said, just a thought. Once you have had some time being profitable trading 1-10 contracts a trade, scaling up is easy and at that point you will have faced some adverse conditions and will know how to react to them, rather than trying to get out of/roll/hedge 55 contracts in a somewhat illiquid index option (like RUT)

 

[ironchef]

Just to be clear, you started trading options 2 weeks ago and you're turning 35 spooz lots at a time? don't you think maybe you might want to start w/ 1-2 lots?

Spread has limited loss/gain. It is a little aggressive first time out but you really don't know her account size . Perhaps they are relatively small compared to her capitalization.